The banking sector continues to be vulnerable to an extremely fluid monetary space in which the CB has pursued a hawkish monetary policy framework characterized by reduced money supply and elevated interest rates. Although m-o-m inflation has begun to ease in 2H22, annual inflation remains elevated negatively impacting real returns in ZWL$ denominated lending businesses. Nevertheless, NMBZ grew its loan book by 146% y/y to ZWL$29.26bn in 1H22; LDR was marginally up from 62% in 1H21 to 67% in 1H22 with leading exposures in individual retail, followed by agriculture and distribution. Credit risk appears to have been well managed with the NPL ratio easing from 1.39% as at FY21 to 1.22% in current period. The bank is strategically focused on growing USD assets and in June 2022 signed a EUR12.5mn line from EIB which will be channeled towards exporters. Deposits grew 128% from ZWL$19.09bn in 1H21 to ZWL$43.66bn in 1H22, included in deposits are balances owed to FMO, SwedFund and Afrexim linked to ring fenced legacy debt arrangements with the CB. Revenue in 1H22 rose 254% y/y to ZWL$6.4bn with net interest income contributing 31% of that, whilst non-interest income continued to bolster the bank’s top line. Fee and commission income came in at ZWL$2.9bn (up 176% y/y) driven by digital banking fees, an area in which the bank has built key competencies. Foreign exchange revaluation gains contributed the remaining balance of ZWL$1.46bn. Fair value gains on investment properties recorded under ‘other income’ were significant in 1H22 at ZWL$5.86bn (up from ZWL$74mn in 1H22); this drove bottom line PAT earnings to ZWL$7.37bn in 1H22, up 1275% from prior similar period. Opex came in at ZWL$3.07bn for the period with circa 50% of that cost attributable to staff costs (ZWL$494m in 1H21). Total cost to income eased significantly to 47% in 1H22 from 63% in 1H21. The bank has fully met the USD$30mn minimum capital requirement and capital adequacy levels are at circa 23% versus a minimum requirement of 12%. On this basis NMBZ resumed paying a dividend in this period at ZWLc45 per share.
